White House rescinds controversial federal aid freeze memo 

(CN) — The White House Office of Management and Budget (OMB) has rescinded a memo outlining President Donald Trump’s freeze on federal aid after the document caused widespread panic and confusion, according to a new memo from the office leaked Wednesday.

“OMB Memorandum M-25-13 is rescinded. If you have questions about implementing the president’s executive orders, please contact your agency general counsel,” the memo stated.

White House press secretary Karoline Leavitt insisted that the rescission is not of the federal funding freeze itself — only of the Monday memo that sent nonprofits and households reliant on federal funding into a tailspin.

“This is NOT a rescission of the federal funding freeze,” Leavitt said in a Wednesday X post. “It is simply a rescission of the OMB memo. Why? To end any confusion created by the court’s injunction. The president’s EOs on federal funding remain in full force and effect, and will be rigorously implemented.”

The freeze was scheduled to go into effect Tuesday evening, but its implementation was temporarily halted by a federal judge in Washington, D.C., who sided with groups of nonprofits who said they rely on that federal aid.

It was one of several legal challenges spawned by the Monday memo, which ordered federal agencies to “temporarily pause all activities related to obligation or disbursement of all federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the Green New Deal.”

One of those challenges was filed Tuesday by 23 state attorneys general, who sought a court order to halt its enforcement at a hearing Wednesday afternoon.

After brief oral arguments, U.S. District Judge Jack McConnell, a Barack Obama appointee, seemed inclined to grant one. He called the Monday memo “hugely ambiguous and broad and potentially chaotic,” and implied that Trump’s meddling of congressionally approved federal aid raises real constitutionality concerns.

But McConnell grappled with what relief the states actually need, now that the memo has been rescinded. With little official explanation from the White House, the judge analyzed Leavitt’s social media statement for guidance.

“Now that the OMB directive has been withdrawn, the effect of any decision by the executive on funding is individual and is related to specific [executive orders] that the president has issued,” McConnell said. “I can’t believe I’m saying this, but that’s my read of the tweet.”

Sarah Rice of the Rhode Island Attorney General’s office argued that the uncertainty is precisely why the court needs to step in and stop Trump from freezing the funds.

“Up until I had to join you here, we were still getting reports from various state agencies about specific funding streams that are inaccessible,” Rice said.

But Department of Justice lawyer Daniel Schwei countered that the states only sued over the memo — not Trump’s numerous executive orders to halt federal spending in the first place.

“I think the breadth of the relief that plaintiffs are seeking is extraordinary,” Schwei said, to which the judge quipped: “So was the breadth of the OMB directive."

McConnell didn’t immediately grant or deny the states’ request for a temporary restraining order, instead asking the parties for updated briefing now that Monday’s memo is rescinded.

Trump’s funding freezes can’t take effect until next week anyway, due to the D.C. federal judge’s ordered halt.

It remains unclear precisely which federal funds would be frozen and how the rescission of Monday’s memo will affect Trump’s existing efforts to pause federal spending. The White House has insisted that individual programs, such as food stamps, Medicare and Medicaid, should be unaffected. But all 50 states were frozen out of their Medicaid portals shortly after the spending pause became public this week.

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